Transnet sets expansion sights on Africa, Middle East

Transnet is pursuing opportunities to expand on the continent and in the Middle East as the state-owned company seeks to redress an over-dependence on its home market.

The utility wants 25% of revenue to come from outside South Africa by 2025, acting chief executive officer, Siyabonga Gama, said in a September 10 interview at Bloomberg’s office in Johannesburg.

That compares with 4.2% of its R61.2bn in the 12 months through March this year. The company has started a process to form a new unit, to be called Transnet International Holdings, which will oversee the foreign expansion, he said.

“We have a fairly good idea where it’s going to come from and how,” Gama said. “We are not just looking at Africa, we are also looking at the Middle East. There are a number of things that we are working on.”

Transnet leadership believes the company depends too much on South Africa, where it operates more than 20 000 km of rail network and facilitates 98% of South Africa’s global trade through its eight ports.

The utility will seek to apply its expertise and skills acquired at home to ports, rail and pipelines in new markets, Gama said.
The opportunities for expansion include consulting, training, and facilities-management contracts, as well as competing for, and operating concessions, Gama said.

The international unit will be capitalised with “a decent amount” of funding, he said.
Transnet last week signed a contract in Cotonou, Benin, to advise on the container terminal.

“We will try and improve their efficiencies, with the view that we will make some further investments once we have helped them with the port master plan,” Gama said of the Cotonou deal. “It’s small but it indicates the direction that we are taking in a number of these markets.”

Transnet already operates in other African countries including Mozambique, Botswana, Zimbabwe and Zambia. Most of the foreign activities are rail-related, Gama said. The company also sees opportunities to invest in new natural-gas pipelines in South Africa, as well as in countries including Tanzania and Mozambique.

Gama was named acting CEO in April, after Brian Molefe was seconded to head state power company Eskom.
http://www.fin24.com/Companies/Industrial/Transnet-plans-international-expansion-20150915